Do you want to buy your first home but are new to the home-buying process? Or do you want to learn about how it all works so you´re prepared for the future when you decide to buy your home? Whether you´re new to buying a home or want to know the ins and outs of the home-buying process or simply need a review, we´re here to give you some guidance. We know the process can be long, overwhelming and frustrating as well as exciting. You´ll have those moments of joy and when you feel like you´ll have your home in no time while other times you´ll feel like you are suffocating with tons of paperwork, protocol and lingo that you don’t even understand. No matter what you’re feeling, you probably have a lot of questions. For this reason, we´ve come up with the top questions and answers for homebuyers.
Here are the top questions and answers to help you through the process:
Q: What are some of the preliminary steps to take if I want to buy a home?
A: If you`re going to buy a home, one of the first early stages of the process is to research about different homes and mortgages. It would also be a good time to organize savings to make a down payment and for any other expenses.
Q: What is the first actual step to take in the home-buying process?
A: When you have a sufficient amount of savings to invest in a home and are actually ready to start with the home-buying process, you need to discuss your options with your bank representative, a variety of mortgage companies and mortgage brokers and get pre-approval for a loan.
Q: Can I still buy a home if I have a poor credit score?
A: Yes, you can still buy a home but it´ll be harder for you since you´ll be at a disadvantage in comparison to other potential homebuyers who have a better credit score. If you are fortunate to buy a home, you may have to pay a higher interest rate on a home loan. If you have a poor credit score but above a score of 580, you can also apply and be qualified for a Federal Housing Administration loan (FHA loan). The downfall if you decide to take this route is that you´ll have to pay mortgage insurance as this is to protect the lender.
Q: What is a foreclosure?
A: A foreclosure is a legal process of the bank taking possession of a home when the mortgagor, the homeowner, hands over full rights of their home to the bank due to not being able to pay his mortgage payments. From the moment the foreclosure process begins, you have a certain amount of time to pay your mortgage payments before the bank takes legal action and auctions your home. However, it may be possible to still redeem your home if it ends up in an auction. If it is a judicial foreclosure meaning that the bank files a foreclosure suit in court, then you have the right to redemption but if the bank chooses to take your home via non-judicial foreclosure, unfortunately, you aren’t able to redeem your home.
Q: What is a property auction?
A: A property auction is a real estate auction opened to the public to bid on a property. It would take place on a specific date, time and place, and the property would be offered to the highest bidder or potential buyer. This occurs when the mortgagor or homeowner fails to pay his mortgage for a duration of time or renegotiate the loan terms with his bank. This can also occur if the homeowner has an outstanding unpaid balance of property taxes, or state or local income taxes. In the case of unpaid taxes, the tax authority would seize the property, not the bank. This would ultimately be the next step after a foreclosure.
If you´re looking to buy a home, this can be a great opportunity since you can get a good deal; however, it can also be risky. Before considering this alternative to buy a property, consult a real estate professional. Professional Home Buyers are real estate experts and can help you explore your home buying options.
Q: What is the difference between a real estate agent and a realtor?
A: A real estate agent or a real estate salesperson is licensed to buy, sell or rent property for home or property owners. They manage a variety of tasks such as interviewing potential clients, studying property listings, taking clients to the property site, handling the paperwork and discussing conditions of sale.
A realtor is a real estate agent who is a member of the National Association of REALTORS®. He must comply with the standards of the association and its code of ethics. As a realtor, he would represent a seller, buyer, tenant or landlord as an agent and primarily vow to protect and promote the interests of his client.
Both real estate agents and realtors fulfill many roles and manage multiple lists of duties. Since buying or selling real estate is a process, these real estate professionals take full charge as leaders by managing negotiations between sellers and buyers, and guiding them throughout the process. On the one hand, when representing buyers, they look for the best property at the best price and assist them starting from the offer all the way to the closing process. On the other hand, when representing sellers, they market their property, find suitable buyers and help sellers receive the best price for their home or property.
Q: Who pays the realtor?
A: Since the realtor represents and helps the seller to sell his home or property, the seller is usually responsible to pay the realtor including fees and commissions. The seller usually includes these fees into the price of the home. Typically, the seller’s realtor gives an equal portion of the commission to the buyer’s realtor. This is how the buyer’s realtor makes his commission.
Q: What are discount points?
A: Discount points or mortgage points or just points are a form of prepaid interest or fees that the homebuyer pays to the bank in order to get a reduced interest rate on his mortgage. One point equals one percent of the mortgage loan amount. Even though this is an upfront additional cost, in the end, you’ll save money.
Q: What is an earnest money deposit?
A: An earnest money deposit is a deposit that the buyer puts down to ensure the seller that he is serious about and committed to buying the house or property. From the seller´s position, giving a money deposit on the home creates a sense of trust and confidence in the buyer since this shows that the buyer is not going to back out or consider other home buying contracts. This occurs once the buyer’s offer is accepted. At closing time, this deposit is then used as part of the down payment. However, if for some reason, the buyer doesn’t end up buying the house, then the earnest money is given back to him.
Q: What happens during closing time?
A: At the time of the closing or settlement, the buyer pays what he owes on the home in the form of a check, the seller signs over the deed to the home to the buyer, the seller gets any profit earned from the sale and the title company registers the new legal documentation of the home with the new homeowners. There’s a lot of paperwork so you´ll have to sign your full name at least 10 times, maybe more.
Q: What is the expected time frame for closing time?
A: Closing time can take as little as 30 days or as long as 50 days. The amount it takes to close on a house depends on different factors including:
Funds – Funding is the most common reason why the closing on a house takes a long. Since the majority rely on a loan to mortgage a home, homebuyers would have to wait for their loan approval. You can speed up the process by getting a mortgage pre approval, which is most often required when making your offer. Cash buyers, on the other hand, don’t have to worry about obtaining a mortgage loan since they have the cash funds to purchase a home.
Home appraisal – A home appraisal is a requirement in order to get a mortgage loan approval. This informs the bank how much your home or property is actually worth. This is important to them because they wouldn’t want to give you a loan that is more than what the property is worth. However, a home appraisal is equally important to all parties. Since an appraisal is done after the buyer and seller negotiate a price, the buyer agrees to buy the house or the seller agrees to sell the house and both parties have signed the contract, everyone hopes that the appraisal comes close to the price that both parties have agreed upon.
Homeowners insurance – It’s essential to secure homeowners insurance in case of those unexpected situations like natural disasters or damages due to a fire and since you need it before you move into your new home, it is recommended to have it ready and not wait until the last minute.
Contingencies – Contingencies refer to either the buyer needing to sell his current home or the seller needing to buy a new home. These waiting gaps could delay the closing date.
Q: Who is responsible to pay for closing costs?
A: The seller would primarily be responsible to pay for the Realtor’s commission whereas the buyer would be responsible for many fees such as appraisal fees, title insurance, origination fees and bank processing fees.
Q: What is the difference between a home inspection and a final walk-through?
A: A home inspection is performed by a professional licensed inspector to examine the property closely to see if there are any defects. The inspector, who takes between 2 to 4 hours to thoroughly inspect the house, provides a written report and takes photos of defects that are found. The seller is ultimately responsible to fix all issues found in the inspection. A final walk-through, on the other hand, which usually takes between 10 minutes to an hour, is performed by the buyer and his realtor, making sure the issues from the inspection have been resolved and the house is in perfect condition. This is done either the day before or the morning of the closing.
Q: How much does a home inspection cost and who usually pays for it?
A: Home inspection costs between $200 to $500, depending on the size of the property. Since the home inspection is for your benefit, you as the homebuyer, will pay this cost. It is recommended to have a home inspection before your closing.
Q: When do I finally get the keys to my new home?
A: You’ll most likely receive the keys to your new home on the day of the closing. However, you may have to wait a couple of days after closing if your county needs some time to officially record the title in your name or if you still have to wait for your loan. This basically depends on your mortgage and the local laws.
Q: How can a professional home buyer help me to buy a home?
A: Buying a home requires a lot of time, effort, paperwork and investment and if you go into the homebuying process blindfolded, you could end up making mistakes and bad decisions, and have a handful of regrets. For this reason, you should go to a professional who has real estate experience and knowledge, and is aware of the “dos and don’ts”. Particularly, Professional Home Buyers provides alternative real estate services to sellers, buyers and investors. They help sellers by making cash offers to buy their homes in their current conditions, which makes the process easy and fast. They also help buyers like you to find your dream home by offering a rent-to-own option to individuals who are not able to buy a home in the traditional way. In addition, they provide opportunities to investors. To find out more about the services we offer, come to our website at www.ProHomeBuyer.com.
If you are in the position to buy your home with cash and would like to learn more about the benefits of selecting this option, please read one of our previous articles “The Benefits Of Buying Your Home With Cash”, posted on September 24, 2018.